Russian Ruble and Canadian Dollar gain

05-20-2009 14:36

The Russian Ruble went up to a new 2-month high versus the US Dollar today on the back of the present oil price that remains an evidence that the depreciation in December, January was excessive. Yesterday the Canadian Dollar rose for the second consecutive day versus the Euro and the US Dollar due to the volatile equity markets, as the oil price increased to nearly $60 a barrel.

High oil price should support Ruble

The Russian Ruble went also up versus the Euro and reached a record high against the single currency since the 26th of January. The Ruble is one of the currencies that consists of 45% Euros and 55% US Dollars. Oil traded at a high-priced $150 mid 2008, while it currently trades at $60, which is a rather high price level that should certainly stimulate the Russian Ruble.

Bank of Russia committed to buy out surplus

At the moment the Bank of Russia is forced to buy out the surplus of Euros and Dollars on the internal currency market in order to keep the national currency above 36.95 versus the commodity currencies (generally the Canadian Dollar, New Zealand Dollar, Australian Dollar and South African Rand). It is also possible that the administration could utilize the right moment to stimulate the currency ahead of the potential major inflation in autumn in order to have an additional instrument to fight increasing prices in that period.

Loonie rises against all major currencies

The Canadian Dollar is one of the commodity currencies that should revalue when the world economy improves. Yesterday the Loonie (Canadian Dollar) rose versus all important currencies, apart from the Pound Sterling, while Monday showed an even larger increase. Oil contracts for June reached a level of $60 per barrel on the New York Mercantile Exchange (NYMEX).

Safe-haven currencies doomed to fall

Analysts believe there is not an other way to perform for the currencies in case of the recession continues to weaken. The safe-haven currencies, such as the Japanese Yen and the US Dollar are likely to decline, while the commodity currencies should advance. Going short on USD/ CAD and long on CAD/ JPY would be a wise trading strategy, in case of the most optimistic scenario for the global economy.